You maintain a running balance with each of your artists or companies for each Label or Contract Account. This balance details each incoming sale or royalty that has been allocated to them, minus any expenses allocated to them.
Payments:
A payment is an amount of money paid to an artist that will offset the balance that is owed to them. For example, if the balance owed to an artist $600 and a payment is made for $200, the artist's balance will then be $400. To send a payment to an artist you must create a statement for them.
Fees:
A fee is an amount of money that is paid to an artist or company that will not affect their running balance. You may use this for one of payments such as upfront signing or remix fees and may choose to also enter it as an expense so that you can allocate the cost to other artists. You can send an individual fee to an artist without creating a statement for them.
Advances:
An advance is money that is paid to an artist or company BEFORE they have been allocated it from incoming sales or royalties. It is usually seen as a gesture of good faith that the client's release is going to be profitable and can be used as an incentive for them to sign a contract.
When you pay an advance, their balance will become negative, meaning that they will need to be allocated at least that same of amount of sales and royalties before they will require further payment. You can send an advance to an artist without creating a statement for them.